Economic Sector

Last updated: Wednesday, December 19, 2018

Tax Support for Start-up Businesses

Posted: Monday, July 10, 2017

In a bid to support start-up businesses, the Hanoi Taxation Department has deployed a tax agent coordination plan to provide tax procedure-related incentives. As of June 23, more than 10 tax agents registered to support newly established enterprises and those upgraded from business households.

According to the Hanoi Taxation Department, in the first five months of this year, Hanoi had over 10,000 newly established companies, totalling 148,000. In addition, the capital city of Vietnam now has over 152,000 operational business households. However, the number of companies converted from business households is very modest.

In fact, many business households do not want to expand their operations while others do not want to transform into corporate entities because they hesitate to carry out accounting procedures and monthly tax declaration. In addition, in many cases, business households buy goods from various sources and not all of them have commercial invoices - a mandatory requirement in accounting. Furthermore, some are operating in conditional fields and having business certificates issued by district authorities. When they become enterprises, they must change business registration certificates issued by city authorities where procedures are tougher and longer to be completed. Therefore, many prefer cloaking business households which are free from various obligations such as social insurance for workers.

At a recent discussion on business support solutions hosted by the Hanoi Taxation Department, a representative from the department admitted that moving an informal sector to an official sector is a certain trend as it helps business households declare and pay taxes as they go and enhance professionalism and efficiency. On the other hand, the transformation of big business households will also help raise prestige and brands.

Free support for start-upsWhile discussing start-up and household conversion support solutions, leaders of the Hanoi Taxation Department, revealed that the tax sector set up a steering committee to support newly established enterprises and business households transformed into corporate entities. Accordingly, tax authorities took the initiative in coordinating with relevant organisations such as the Vietnam Tax Consultants Association, the Hanoi Association of Small and Medium Enterprises, relevant bodies and tax agents to learn about concerns and difficulties from start-up businesses so as to launch best tax support and incentive policies. Tax authorities founded a new business start-up column on the website of the Hanoi Taxation Department (www.hanoi.gdt.gov.vn) to provide contents and guides on tax procedures and processes, invoices, tax code, tax declaration, payment and refund. As of June 23, 10 tax agencies registered to support start-ups and transformed business households.

Ms Nguyen Thi Cuc, Chairwoman of the Vietnam Tax Consultants Association (VTCA), pledged that VTCA will cooperate with the Hanoi Taxation Department to organise dialogues and meetings to resolve difficulties against business households and start-ups; update tax policies for free to its members via email, especially start-ups. She also called and expects tax agents to take the initiative in approaching enterprises, introduce fee reduction policies for start-ups businesses and business households transformed into companies.

Ms Dinh Thi Thuy, General Director of MISA Company - a tax service provider, said, with the spirit of cooperation for mutual development, MISA offers accounting software, MISA SME.NET 2017, to start-ups for free from the initial retail price of VND2.95 million. This is a professional and scientific tool for new businesses to standardise their accounting systems from the beginning to increase productivity and cut costs. MISA will organise software usage training, coordinate with the Hanoi Taxation Department and relevant bodies to answer questions and support new businesses.

The Hanoi Taxation Department hoped that positive support from tax authorities and coordination of local tax agents will provide the best conditions for start-ups to develop and form a city of entrepreneurship. The city expects to have 200,000 new companies 2016 - 2020.